Federal watchdog examines Seminoles' gambling profits

A team from the National Indian Gaming Commission arrived this week at the headquarters of the Seminole Tribe as part of an ongoing investigation into the tribe's spending of gambling profits.

The review will also examine findings uncovered in a South Florida Sun-Sentinel series published last week, said Phil Hogen, chairman of the commission, which regulates how tribes spend gambling profits.

"There were things mentioned in the articles that we knew something about. There was also new information. We're going to inquire as to those things," Hogen said.

The commission also has notified the Federal Bureau of Investigation in Washington, D.C., that its staff members want to meet with FBI agents in South Florida, but as of Friday a meeting had not been scheduled, said Judy Orihuela, an FBI spokeswoman in Miami.

"I think they just wanted to share the results of the audit with us, but I don't know when that is going to be. I don't know if they have done anything yet," Orihuela said. "It is all through headquarters that we are getting this information."

Shawn Pensoneau, a spokesman for the commission, said Friday he could not comment on any FBI involvement.

"We don't comment on potential reviews and investigations," he said.

Gary Bitner, a spokesman for the tribe, said the commission notified the tribe on Oct. 25 that its staff would arrive Tuesday.

On Oct. 9, the Sun-Sentinel interviewed Hogen, who said the newspaper's findings "cry out for some inquiry, and they will receive that."

In the series last week, the Sun-Sentinel detailed spending by members of the elected Tribal Council. Among them was a practice by certain council members of requesting checks under $10,000 without any other approval. In one eight-month period in the fiscal year that ended in September, more than $1 million in checks went to council member David Cypress and his children, all in round amounts under $10,000. Outside auditors who examined the tribe's 2005 spending warned that the practice created an increased risk for fraud.

The newspaper also found that council members have spent more than $280 million since 2000 from discretionary funds they control on tribal members and events.

Council members have paid tribal members' bills, financed their vacations and bought them cars, motorcycles, furniture, televisions and computers. Some council members and their families especially benefited. Cypress alone spent more than $160 million since 1999.

Increases in spending around elections, which occur every two years in May, have helped in part to keep a majority on the council in power for more than a decade, the Sun-Sentinel found.

Through at least 2004, council members' discretionary funds included gambling profits, which under federal law can be used only to benefit the tribe as a whole. Their spending came under scrutiny by the commission nearly four years ago. The commission characterized such things as purchases of luxury cars for individual members as an "egregious misuse" of gambling profits.

After a series of meetings with the tribe, the commission launched an investigation in October 2005.

That review was completed this year. In a May 11 letter to the tribe, the commission said the Seminoles were still not in compliance with federal law but praised the tribe for "noticeable progress" and "positive steps." The letter also outlined 13 problem areas.

The agency has taken no enforcement action against the tribe related to its spending. The commission has the power to fine tribes, close their casinos and make referrals for criminal prosecution.

Marcia Green, adviser to Tribal Chairman Mitchell Cypress, and Bitner have said the tribe has made considerable progress since the commission first raised its concerns. Neither the tribe nor the commission would say what records are currently under review or what the commission's investigators found this week.

Testifying before the Senate Indian Affairs Committee in February 2006, Hogen said the commission's "approach to expenditures is that where gaming revenues are spent in a manner that does not benefit the tribal government or tribal membership as a whole, then the NIGC will investigate."

Hogen testified the commission has found instances while reviewing the spending of other tribes where gambling profits benefited tribal officials or factions, not the tribe as a whole, and where tribal money was used to influence elections.

"I should also note that in a number of circumstances, our investigation discovered evidence of possible criminal activity," Hogen testified. "As required by [federal law], we referred the relevant information to the appropriate law enforcement agency for further investigation."